College Testing Firm ACT Invests in Edtech Startup Smart Sparrow

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ACT, the big college admissions testing organization whose CEO aims to make it an educational venture as well, is investing $7.5 million in interactive online learning startup Smart Sparrow.

Smart Sparrow specializes in online courses that teach students how to master skills that have a physical component, such as biological laboratory techniques and drawing for engineers. The company was founded in Sydney, Australia, in 2011, and now has a second headquarters in San Francisco. ACT’s investment is part of an $8 million Series C fundraising round, in which previous investor Uniseed also participated. The startup’s fundraising total is now $22 million; its other investors include Moelis Australia Asset Management, Yellow Brick Capital Advisers, and OneVentures.

Iowa City, IA-based non-profit ACT is using its testing expertise to guide further learning while students are still preparing for college-level work, rather than testing only at the end of high school when the students are applying to higher educational institutions. For example, its ACT Aspire system is designed to identify skills gaps in grade school and secondary school students, and get their learning back on track. This is ACT’s most-used learning and assessment product, aside from college entrance exams, the testing organization says.

ACT is also partnering with a fellow non-profit, NROC Project, to offer personalized remedial instruction to college-bound students who need to catch up in English and math before their freshman year. The joint program, ACT CollegeReady, will be offered to colleges this spring.

“Our CEO, Marten Roorda, who joined ACT in 2015, is leading ACT’s strategy to become a learning company and a learning analytics company,” an ACT spokesperson said in an e-mail exchange with Xconomy. “Just as we disrupted the assessment industry nearly 60 years ago when we introduced the ACT test, we believe that, to advance our mission, it’s time to disrupt the industry again.”

The company is also moving into the area of workplace skills assessment to aid employers, with its ACT WorkKeys system.

ACT, which invested $10.5 million in the education-focused venture capital firm New Markets Venture Partners in August, plans to continue making strategic investments in edtech companies.

ACT and Smart Sparrow will be collaborating “to accelerate work in learning innovation and expand upon their shared mission to help individuals succeed academically and make successful transitions into the career pathways of tomorrow,” according to a press release about ACT’s investment. At this point, there are no plans to incorporate Smart Sparrow’s services into ACT’s product offerings.

Smart Sparrow offers design tools to educators so they can create lesson units or full courses. Universities pay the company fees based on the number of students who enroll in the courses, which are currently hosted on the Smart Sparrow platform. Content developers who create course components or full courses for their own schools can also license them for use by Smart Sparrow or other schools.

The edtech startup declined to disclose its revenue numbers or its number of paying customers, but says its courseware development system is used by more than 10,000 faculty members at colleges and universities worldwide.

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy